State regulation: 4 things to expect in 2013
By National Underwriter
By Elizabeth D. Festa
State insurance regulation will be affected by a few unknown variables in the coming year, including the still-pending FIO report, the NAIC's new leader and the implementation of new reserving methodology.
1. The FIO report.
The mystery contents of the regulatory modernization report were much awaited by the industry throughout the majority of 2012, even when it appeared it would not be made public until after the Presidential election. While there is plenty to speculate about, only when it is finally issued by the Federal Insurance Office will we have an idea of the FIO’s intent toward a more modern regulatory regime, including whether it intends to act purely as a fact-finding body, or if it will lay the groundwork for more substantive action.
2. A new leader at the NAIC.
With the retirement of Terri Vaughan, the NAIC is looking for a replacement CEO, to be chosen for his or her ability in Washington, and in staving off federal regulation, and the manner in which the Federal Reserve regulates some insurers under Dodd-Frank Act strictures. This will not be an easy job at a time when the NAIC is commanding a large budget with an ambitious agenda and no small number of critics.
3. An eye to the rest of the world.
State regulators will be very engaged internationally as they work toward a cohesive system of global financial stability while trying to preserve U.S. specific approaches. As Europe works out its own uniform standards, European-based insurers are likely to abide by those, which tend to be more strict than what is already present in the United States. The risk of the U.S. losing industry regulatory momentum is quite real.
4. Reserve, reserve, reserve.
Regulators will be shepherding the freshly adopted principles-based reserving methodology manual through their legislatures and building out health care exchanges if their states welcomed the Patient Protection and Affordable Care Act (PPACA). In addition, regulators will be looking into the extent to which their life companies’ reserves have been siphoned off by special purpose vehicles or captives and figuring out what to do about it.
Originally published on LifeHealthPro.com